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India bars three Iranian banks on security fears

Saturday, July 21, 2012

The move complicates New Delhi’s efforts to settle its iran
oil bills:

INDIA: India's home ministry has refused to allow three
Iranian banks to open branches on Indian soil because of concerns about
money-laundering and terror financing, a report said on Friday.

The move complicates New Delhi's efforts to settle its oil
trade bills with the Islamic Republic, the Indian Express daily reported,
quoting an unnamed home ministry official for the report.

The ministry has denied security clearance to applications
by Parsian Bank, Bank Kasargad and Eghtesad-e-Novin Bank because of its
obligation to guard against money laundering and terrorist financing, the
newspaper said.

There was no immediate comment from the home ministry.

Fuel-scarce India plans to import 15.5 million tonnes of
crude oil from Iran this year.

It has faced difficulty in finding banks to transfer
payments to Iran due to US-led financial sanctions against the Islamic republic
that have dried up dollar payment routes.

To help circumvent this, India and Iran clinched a deal
under which New Delhi would pay for close to half of its Iranian oil purchases
in rupees.

Allowing branches of Iranian banks to set up in India would
made it easier for Indian firms to boost rice, tea, yarn, fertiliser and
textile exports to Iran as well as facilitate cooperation on engineering and
other projects.

Iran will use the rupees it receives for oil to buy Indian
goods. Large delegations from each country have already made visits to explore
trade opportunities.

Transactions are now routed in euro payments through Turkiye
Halk Bankasi and 45 percent of crude payments in rupees through India's
state-run UCO Bank.

India's Department of Economic Affairs plans to ask the home
ministry to reconsider its decision, citing “strategic compulsion” for the
opening of the Iranian bank branches, the newspaper said.

Iran is also looking to India for transfer of technology to
modernise its textile industry and investments in a railway corridor to connect
Iran to Caspian Sea countries.

India, which imports four-fifths of its crude, says it
shares the US anti-nuclear proliferation goals. But it also views Iran as an
important source of oil to feed its economy's fast-growing needs and sees Iran
as a key ally in stabilising Afghanistan following the US planned troop exit.